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Carl E. Person
225 E. 36th St Suite 3A
New York NY 10016-3664
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Prosperity/Poverty Index to Measure Increase/Decrease in the U.S. Standard of Living
1st Published: 01/27/07; Last Update: 11/12/07 1:38 pm
You Can Fool All of the People Most of the Time
Abraham Lincoln (later P. T. Barnum) said: "You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time."
Lincoln, if he were alive today, might have been inclined to say: "You can fool most of the people all of the time - when a handful of individuals and their multinational corporations control the nation's media."
One of the most prevalent lies perpetuated by the mainstream media is that a rising stock market is good for the American public. This Great Lie, propagated by the monopolized media, has permitted the greatest theft of wealth ever occurring in the history of the world, and the shifting of wealth continues at a feverish pace, until there is nothing left to steal. The magnitude is tens of thousands of times the infamous Teapot Dome Scandal of the 1920's (1921-1929), involving a single oil field, known as The East Teapot Dome oil field, located at 43°17'19?N, 106°10'22?W, elevation 5,280 ft., in Natrona County, Wyoming. See Wikipedia on Teapot Dome Scandal.
For the past 20 years or so the stock market has been rising, off and on, but always rising to new highs, and the public's standard of living has been declining. You can't prove this by looking at any statistics published by the Wall Street Journal or The New York Times, but this is of no importance. The public knows about the decline. The public is working harder for less money and has lost a lot of benefits it thought they had. When you total everything up, the public has lost ground while the major corporations, their major shareholders, and especially their top officers have been making out like bandits.
The average Fortune 500 C.E.O. in the United States during 2006 earned about 500 times more than the average corporate employee. The average C.E.O. for a public corporation earned in one day as much as the average employee earned in one year. This money is taken from the public, one way or another, and reduces the public's standard of living. [The undeserved income for one of the excessively-paid C.E.O.'s for one year could well exceed the total amount involved in the Teapot Dome Scandal.]
Prosperity/Poverty Index Explained
The way that the public has been prevented from learning about the fact of their declining standard of living seems attributable to the myriad of statistical data chronicling the steady advance of the rich and powerful, through the Wall Street Journal's Dow Jones Index, the Fortune 500 Index, the S&P or Standard & Poor's 1,000 Stock Index, and various other indexes based upon the market value of property owned by the rich. When these indices go up, they indicate that the rich are getting richer, and their owned and controlled media duly report to the public that the markets are going up and that the public is going to prosper as a result. The media are never quite sure how this miraculous transformation is going to take place, of moving the prosperity of the rich over to the poor, but the major media are quite sure it is going to happen, and has spent decades in deceit of educating the public about what they can expect if the public continues to support programs that make the rich richer.
In addition, the Conference Board, a non-profit globally-oriented publicist and tout for (and financed by) the multinational corporations, creates and publishes various statistics. Wikipedia describes the Conference Board and its statistics as follows:
The Conference Board is a non-profit global business organization composed of business executives that hosts conferences, conducts business management research, and produces a number of economic statistics, including the Consumer Confidence Index, CEO Confidence index, the Help Wanted index, and indexes of leading indicators, coincident indicators, and lagging indicators.
None of these indicators alone can be used to show changes in the American standard of living, although I include the Help Wanted Index as a small part of my Prosperity/Poverty Index. The United Nation's "Human Poverty Index" is a beginning, using life expectancy, health, education and standard of living to compare poverty among the world's different countries. See Wikipedia: United Nation's "Human Poverty Index".
What I believe the public needs is what I call a Prosperity/Poverty Index. I ran the precise phrase through a Google search on 1/27/07 and found that the precise phrase and two variants have not been used (or at least not in the cyberspace explored by Google's web crawlers). Here are the three responses I got from Google: (1) Your search - "prosperity/poverty index" - did not match any documents. (2) Your search - "prosperity-poverty index" - did not match any documents. (3) Your search - prosperity poverty index" - did not match any documents. These searches helped me to believe that I am on the right track, that there are no meaningful statistics being gathered to show monthly or bi-weekly changes in the standard of living for Americans, or the growing disparity between Americans and the multinational corporations and their officials and majority shareholders who control the government of the United States.
The United States government gets into the act of creating statistics, but (as one would suspect) not very helpful to determine if the public is experiencing a declining standard of living. www.Economic Indicators.gov is published by the Economics and Statistics Administration of the U.S. Department of Commerce. Its stated mission is to provide timely access to the daily releases of key economic indicators from the Bureau of Economic Analysis and the U.S. Census Bureau. None of this enables me to determine if the public is gaining or losing in the fight to maintain or increase its standard of living.
Current President Bush's selected Economic Advisors have been preparing what they call the "Economic Indicators", described as: "Available from April 1995 forward, this monthly compilation is prepared for the [President's] Joint Economic Committee by the [President's] Council of Economic Advisors and provides [biased, self-serving] economic information on prices, wages, production, business activity, purchasing power, credit, money and Federal finance."
Here are the leading 10 statistics that make up the highly touted Economic Indicators index:
- The interest rate spread between 10-year Treasury notes and the federal funds rate.
- The inflation-adjusted, M2 measure of the money supply.
- The average manufacturing workweek.
- Manufacturers' new orders for consumer goods and materials.
- The S&P 500 measure of stock prices.
- The vendor performance component of the NAPM index.
- The average level of weekly initial claims for unemployment insurance.
- Building permits.
- The University of Michigan index of consumer expectations.
- Manufacturers' new orders for nondefense capital goods.
You don't see anything that the average consumer can relate to, except perhaps unemployment insurance claims.
Forex Brokerage Firms, in its website, gives its opinion that the weekly release of the "Economic Indicators" "merits a C-" on a scale from A to F, and that the Economic Indicators, in their attempt to predict business trends "'has predicted 'nine of the last six' recessions." See critique at Critique of the Conference Board's "Economic Indicators". The non-profit Conference Board also published the "Consumer Confidence Index", which is just one more false and misleading index to prevent the public from learning about the economic disaster heading straight for them, while the rich are getting richer.
Yet, President Bush has his own view of his economic advisory team, as quoted from President Bush's "whitehouse" website, at www.whitehouse.gov:
Addressing the press, President George W. Bush stands with Ed Lazear of the Council of Economic Advisers, left, and Al Hubbard of the National Economic Council, in the Rose Garden Friday, April 28, 2006. "I'm joined my two top White House economic advisors. The reason why is because we've had some very positive economic news today: the Commerce Department announced that our economy grew at an impressive 4.8 percent annual rate in the first quarter of this year. That's the fastest rate since 2003," said President Bush. "This rapid growth is another sign that our economy is on a fast track." White House photo by Eric Draper
The government is not providing any statistics showing how the public is losing economic ground while the multinational corporations and their top officials and major shareholders are increasing their wealth at a faster rate than ever before. The U.S. Department of Health & Human Services'"Poverty Index" may reflect part of the problem but doesn't allow monthly or bi-weekly comparisons and doesn't deal with or analyze the economic elements that show a deterioration of the standard of living for most Americans. See U.S. Dept. Health "Poverty Index" - 2 Versions.
We need to have a way of measuring this growing disparity. My idea for a Prosperity/Poverty Index would assemble the economic information which most closely tracks the standard of living of most Americans, by taking economic factors that are understood by individuals and families, creating an index out of such statistics, and then allowing a comparison with the past for each reporting period, to enable individuals and families to see whether they are doing better or worse - or whether they (if average) are experience a higher or lower standard of living. Also, such new index would enable a steady comparison with the economic indicators created and published by President Bush, his advisors and others than in turn will occupy these positions.
The Statistics Needed for a Meaningful Prosperity/Poverty Index
The following statistics would have to be gathered or created each period (perhaps monthly or bi-weekly) and an appropriate weight assigned to each, to assure that the importance of a statistic is not overstated or understated, or duplicated without appropriate adjustment. But even with these problems, the statistics would be able to help the public determine whether they are better off this month than the past month, and it would give some meaningful targets for our elected officials to try to improve, if they want to stay in office. Here are the 50+ factors, without weight assigned, without duplication explained or adjusted, and in no particular order:
- Combined federal, state and local income tax rate on wages and salaries
- Unemployment rate, adjusted to include underemployment and persons no longer seeking employment (but who would work if they could obtain a job)
- Breadbasket index of prices for 13 food items
- Heating fuel prices
- Gasoline prices
- New-car prices
- Used-car prices
- Labor rate for car repairs
- Bankruptcies, personal; and Bankruptcies, small business
- Credit card indebtedness; credit-card payment arrears; and total late fees
- Average interest rate on home mortgages
- Average interest rate of credit-card debt
- House mortgages, average days to pay; total arrears; number of foreclosures commenced; number of completed foreclosures
- Total rents paid by tenants for their houses, apartments or other dwellings
- Total real estate taxes paid by owners of owner-occupied 1-family or 2-family dwellings
- Interest rates paid on savings accounts
- Real property values
- Number of tax compromises with I.R.S.
- Number of car and light truck repossessions
- Number of applications for government jobs
- Number of applications for military
- Number of applications for college teaching positions
- Applications in comparison to number of jobs available
- Number of help-wanted advertisements
- College tuition and other college expenses
- Private K-12 tuition and other expenses
- Amount of income taxes paid v. amount earned for wage/salary earners
- Average age of car and light truck
- Number of new cars and light trucks sold
- Average amount of liquid savings (stocks, bonds, checking and savings accounts, and cash)
- Average value of house, co-op, condo or trailer owned by the individual or family
- Stock market price level
- Percentage of work force belonging to a union
- Percentage of work force working for government or non-profit organization
- Total amount of compensation paid to top 10 executive of the Fortune 500 companies
- Number of jobs lost to outsourcing to other countries
- Corporations' effective tax rate on sales to U.S. and on profits attributable to U.S. sales
- Total amount of subsidies paid by the government to business corporations
- Increase/decrease in federal, state and local debt
- Profits earned by top 100 monopolistic or almost-monopolistic companies
- Number of applicants waiting for government jobs
- Average length of time for college graduate to obtain a job
- Average starting salary of college graduate
- Average income of recent college graduates v. average cost of the college education
- Total amount of parking ticket fines and other non-felony fines paid by individuals during reporting period
- Total number of man/woman years served in jail during the reporting period
- Total number of years of prison sentenced during the reporting period
- Total budget of top 100 cities
- Total budget for all other cities, towns, villages and counties
- Total budget for all 50 states
- Total amount spent by individuals for healthcare
- Total amount spent by individuals for dental care
- Total amount spent by individuals for prescription drugs
- Total number of Wal-Mart and Sam's Club Stores in the U.S.
- Total number of stores in the U.S. of the other top 100 retailers
As you can see, most if not all of the above factors affect the pocket book and standard of living for citizens and residents of the United States, and if we can measure the monthly changes we will be in a position to see whether the average standard of living for Americans is going up or down, and compare such movement with the stock market indices. Clearly, I believe, we will see the stock market going up while the standard of living is going down. There is a reason for this. Let me explain.
Why Your Standard of Living Goes Down While the Stock Market Goes Up
Most people in the United States are not in a position to live off their ownership of stocks and bonds, if they are lucky enough to have any stocks or bonds at all. The mere fact that there may be about 50,000,000 people in the United States that have an interest in stocks and bonds through a pension trust fund does not make them rich. It merely means that they have a financial interest often ranging from a few dollars to perhaps $10,000 and often more. But the average value for the 50,000,000 beneficiaries is perhaps $10,000 (my guess). The amount of interest per month that $10,000 could produce at 4% interest per year is $400/12, which equals $33.33 per month. This is less than a single late-fee payment of a typical $35 to a credit card company or bank, and only a small fraction of the economic problem for the average American.
When the stock market goes up it is often because the public companies have obtain money from the public. At one time, when business was competitive, the cost of an item would be closer to the costs incurred by the company to sell the product to the public. Now, however, with the federal government handing out more and more monopolies to favored corporations, the profits of such favored companies are going up and all of that money is coming out of your pocket, so that as the major corporations are getting richer, you and most of the other Americans are getting poorer.
When leveraged buyouts take place, where a group of wealthy investors borrow money from a bank and buy all the business and other assets of a large corporation, the wealthy investors have found a way to obtain their profits in advance, all of which is paid by someone else, usually you and other small investors, one way or another. This was how Goldman Sachs was able to pay an average Christmas bonus to its employees in 2006 of about $500,000. $11 billion was handed out as 2006 Christmas bonuses by Goldman Sachs, and they never created any products for sale to the public or world. All they did was reorganize the financing and ownership of large corporations using the public's money. You, one way or another, paid for these hefty bonuses, and never got a bonus yourself, more than likely.
When a corporation (often after a leveraged buyout) closes its U.S. plants and ships American jobs to China, India, Mexico or some other low-wage country, the stock price increases, because the corporation has decreased its payroll of expensive American employees and has hired low-wage employees to replace them in other countries. This makes the company more profitable, and the stock value goes up as a result, while thousands of tens of thousands of American are left jobless.
The Wall Street Journal, New York Times and other major media report this increase in stock value as a boon to Americans. They say that the stock market is booming; that the economy is booming; that everyone in America will soon see the benefits of these great economic increases. But, let's be frank, these increases go only to the rich, not to the rank and file consumer or American. For them, the stock market increases only portend bad economic times. When the stock market goes up, it too often means that we have more jobs being shipped overseas, and more poverty and despair for thousands or tens of thousands of Americans.
We Need to Measure This Povery and Despair in Some Meaningful Way
The Prosperity/Poverty Index I describe above is needed to show and measure the extent to which Americans are losing their country to the major corporations. The major corporations, directly or indirectly, pay for the campaigns of the candidates nominated by the Republicans and Democrats, and when the time comes to vote, these elected officials throw your tax money and your standard of living to the wealthy corporations as the official thanks for a well-financed campaign. At the same time, the elected officials tell you the same old story that they are going to be working on the the same old problems. You and I both know that the current group of elected politicians are going to do very little for the voters, but much for their political patrons as well as themselves.
We need to show Americans that our present policy of giving away the country to the wealthy corporations is empoverishing the rest of us, the 98% of Americans who are not wealthy.
My proposed Prosperity/Poverty Index will accomplish this. I believe, with a little bit of adjustment through weighting and taking duplication into account, the index would show that individuals are in a state of steady economic decline, in rough proportion to the increases in corporate earnings for the major corporations and in proportion to the increases in value of their publicly-traded stocks.
Using a Projectible or Nielsen-Type Survey to Obtain Some of the Needed Data
The data for some of the 50+ components of my proposed Prosperity/Poverty Index could be created through a projectible survey similar to the way Nielsen Media Research determined (i.e., estimated) how many persons were watching various TV shows during a reporting period. Nielsen used telephones to gather the information, and then tried out electrical reporting devices attached to the subject's television set. [Information about Nielsen's activities are available at Information about Nielsen Surveys.
If certain statistics I want are not readily available, let's assume this to be "Average income of recent college graduates v. average cost of the college education", you could have this data reported by 5,000 individuals chosen at random who agree to participate in the survey. Each month these 5,000 persons would email their data for the month to the survey's website, where the information would be added to a spreadsheet or database and the calculation or estimate could then be made of the "average income of recent college graduates" and the "average cost of the college education". It is even conceivable that a participating group of 5,000 individuals, selected at random, could produce (through projection) all of the information that would be needed for the Prosperity/Poverty Index.
If this is true, then what needs to be done first is to determine what number of randomly selected individuals is needed to enable all of the figures to be projectible (so that there is an adequate number of college graduates, unemployed, persons purchasing prescription drugs, etc.); how that number of persons is to be selected, keeping in mind that a certain percentage of the persons asked will not agree to participate and that there will be a need for replacements to cover persons who drop out of the program voluntarily, or by death or incapacity. Thereafter, we would have to prepare a questionnaire designed to obtain the desired information, without bias in the phrasing of the questions, the way in which the questionnaires are to be sent out (to protect the projectible nature of the survey), and the way in which responses are to be received and processed.
The net effect would be to have a Prosperity/Poverty Index that would show, from month to month, similar to an advance-decline line, whether the economy or standard of living is getting better or worse for average Americans, and enable us to determine whether, or see that, the standard of living goes down for the vast majority of Americans as the stock market climbs higher and higher.
Wanted: Volunteers to Help Me Work on the Prosperity/Poverty Index
This is an interesting project for anyone interested in politics, economics, government or social justice. I could use some volunteers to help me put together and maintain the proposed index. I need an economist and someone experienced in conducting projectible surveys to show how to appropriately weight the variables, adjust for duplication, obtain a random 5,000 (or other number) of reporting persons, and prepare an unbiased survey form. I may (or may not) need several researchers to locate and/or create the statistics. Also, I need one or more volunteers to publicize the index and the problems it is designed to cure.
Volunteers or anyone with questions about my proposed Prosperity/Poverty Index can reach me by email at Send email to Carl E. Person or by calling me at my office, 212-307-4444 or by faxing me to fax number 212-307-0247.
I look forward to meeting and speaking with you.
Meanwhile, you might be interested in two of my new websites:
Carl E. Person, Editor, LawMall, email@example.com
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